CEOs Remain Positive About Recovery
With the U.S. economy in the midst of an uncertain recovery, CEOs are identifying a growth agenda for the year ahead powered, at least in part, by new capabilities and opportunities. Forty percent of CEOs say revenues have either already recovered or never dropped, and an additional 24% expect a rebound to pre-pandemic levels by June 2021, according to a new survey conducted in October by Fortune in collaboration with Deloitte’s Chief Executive Program.
The survey, conducted in October and featuring the views of 125 CEOs representing more than 15 industries, also found that 50% of CEOs say their employee headcount levels have either recovered or never declined in the first place. Seventy-four percent of respondents say the crisis has created significant new opportunities for their business, and 58% cite an improved outlook for productivity in the medium and long term.
“The historical data and correlations that leaders have relied upon to drive strategic business decisions are proving far less useful in these unprecedented circumstances,” said Deloitte US CEO Joe Ucuzoglu at a recent virtual meeting of Fortune CEO Initiative members to discuss these themes. “As a result, planning for a range of scenarios and being able to adjust quickly to the facts on the ground have proven to be very advantageous.”
CEO optimism may be buoyed by growing momentum around digital transformation catalyzed by the pandemic. Eighty-five percent of CEOs agree that the pandemic has significantly accelerated digital transformation, up from 77% in the June 2020 Fortune/Deloitte CEO Survey. “As in so many other areas, the pandemic acted as a forcing mechanism to initiate and accelerate change that might have otherwise been slow to happen, and now everyone has been thrown into a kind of experiment around digital,” says Benjamin Finzi, who leads Deloitte’s Chief Executive Program. “CEOs are eagerly looking to discover what new advantages and opportunities there are to be gained.” Financial analytics software have seen tremendous growth and adoption during these times.
The pandemic’s impact on work and other key economic parameters could be felt long after a vaccine and other therapeutics are available. Remote work is still pervasive. CEOs report that 68% of their employees are currently working from home, and they expect one-third of their workforces to be remote even in January 2022.
“A consistent message I hear across our client base is the desire to safely get people back in person for at least some of their time and find an optimized hybrid model,” said Ucuzoglu.
Whether a virtual workforce is as productive and innovative as before is unclear to CEOs, as only 39% and 40% of them say their virtual workforce has been more productive or innovative, respectively. The others were split between decreases and the status quo. It is already well-established that remote working can cause employee-burnout and create day-to-day, in-home challenges. In response to an open-ended question about how their companies are struggling most, the top answer from CEOs was maintaining employee well-being, followed closely by a concern that innovation will suffer the longer the crisis continues.
Diversity, equity, and inclusion (DEI) are also a top priority. Ninety-six percent of CEOs acknowledge DEI as a strategic priority. The majority say they will be prioritizing DEI data transparency, diversity in talent recruitment, internal policies, community engagement, and leadership and board composition in next 12 months. In addition, 83% of surveyed CEOs say their organization has set or is setting measurable targets for progress toward DEI goals, and 64% say progress against DEI targets is or will be factored into leadership evaluation and compensation.
New Partnerships, New Opportunities
The October survey revealed that 70% of CEOs agree that the pandemic is fostering the formation of new partnerships and alliances. Perhaps some of the most compelling examples of innovative partnerships fueled by lightning-fast digital transformation are those formed to deal with and defeat the virus. Most of the vaccines in development are run by partnerships. And the urgent timelines to create and distribute a vaccine that can save lives and help the economy recover can be met only with efficiencies realized by more than one entity working together.
“There is a consistent view across Deloitte’s client base that the pandemic has created significant new opportunities for their companies,” Ucuzoglu says. “Even in an environment where it’s challenging to find cash to invest, what we’re seeing is that clients are prioritizing investments in technology, software, and cloud migration. I’m optimistic around the potential for the real economy to experience a long period of tech-driven growth coming out of this.”